The proposed acquisition of U.S. aluminum-product maker Aleris Corp. by Zhongwang USA LLC is at risk over national-security concerns raised by U.S. officials, who are increasing scrutiny of takeovers of American companies by Chinese buyers.

Aleris and Zhongwang USA withdrew a notice seeking approval of the transaction from the Treasury Department’s Committee on Foreign Investment in the U.S., with Aleris saying in a filing on Wednesday there can be “no assurance” the deal will be approved, leaving it in limbo. Either party can pull out of the merger before it expires at the end of the month, it said.

The Aleris deal, which would be China’s biggest-ever purchase of an overseas metals processor, is among a number of Chinese takeovers of U.S. businesses that have come under heightened scrutiny during the Trump administration. Last month, HNA Group Co.’s proposed $416 million investment in Global Eagle Entertainment Inc., an in-flight entertainment and Internet-services provider, collapsed after the two companies failed to get approval from CFIUS. Other deals have encountered delays in their reviews.

“The parties have withdrawn the voluntary CFIUS notice and we are in discussions with Zhongwang about our further course of action,” Jason Saragian, an Aleris spokesman, said by phone. Amanda Xu, a Hong Kong-based spokeswoman for Zhongwang, declined to comment on Thursday, and referred to statements already made by Aleris.

Shares in China Zhongwang Holdings Ltd., sister company of Zhongwang USA, fell 3 percent to HK$4.50 in Hong Kong, down from a two-year closing high of HK$4.78 on Aug. 8. Both China Zhongwang and the U.S. unit are subsidiaries of a group founded and owned by Chinese entrepreneur Liu Zhongtian.

New Markets

Aleris and Zhongwang USA have been trying to win approval for their deal for a year. Cleveland-based Aleris agreed last August to be bought by Zhongwang USA for $1.11 billion in cash. Aleris Chief Executive Officer Sean Stack said the deal would allow Zhongwang to expand into product and geographic areas where it wasn’t present. Zhongwang USA agreed to take on Aleris’ $1.22 billion debt in return for gaining access to North American and European markets and adding rolled aluminum sheet products.

At the time, Stack said he didn’t anticipate any regulatory hurdles because the deal didn’t “check any of those boxes” for the criteria CFIUS looks at. “We’re not a defense contractor,” Stack said at the time. “We don’t have a plant near a key U.S. installation.”

Lawmaker Opposition

The deal drew criticism from a group of senators last November before the presidential election. The lawmakers -- including Democrats Ron Wyden and Chuck Schumer and Republican Rob Portman -- signed a letter to then-Treasury Secretary Jack Lew saying Chinese entities may have relationships with China’s military, which would compound the risk that U.S. technology falls into the “wrong hands.”

Aleris drew more criticism in May from Leo Gerard, the International President of the United Steelworkers, who said CFIUS should reject the deal, calling for “strict scrutiny” because of the potential impact on U.S. national security.

CFIUS, which vets whether proposed acquisitions of U.S. businesses pose national security threats, has effectively frozen deals due to several factors, according to people familiar with the panel’s work, including the lack of political leadership on the multi-agency committee, heightened concerns about China and a backlog of deals. The possibility that Congress could toughen reviews with new legislation is also having a chilling effect, the people said.

Reviews are being strung out indefinitely, forcing companies to pull and refile their deals several times, the people said.

MoneyGram International Inc. had to restart the CFIUS review of its sale to Ant Financial, the financial-services company controlled by Chinese billionaire Jack Ma, after failing to win approval from the panel within a 75-day deadline. Genworth Financial Inc. and China Oceanwide Holdings Group Co. also refiled with the committee last month.

The regulatory obstacles for Aleris and Zhongwang USA come amid the Trump administration’s ongoing investigation into whether steel and aluminum imports threaten national security under Section 232 of the Trade Expansion Act.

Trump said last month that a decision on the steel investigation, on which the administration originally placed a self-imposed deadline for the end of June, will have to wait after policy decisions on health care, tax reform and maybe even infrastructure.